Issue 1: Sent items do not appear to be reconciling properly. Rule set-up on
the Outlook desktop to archive sent items older than 1 week.
Handheld still displays items that do not appear within desktop sent
items.

Issue 2: Blackberry handhelds are set-up only to have inbox and sent items
reconciled. However if I view folders on the handheld I see emails in
other folders. I would only have expected to see emails in the inbox
and sent items folder.

Issue 1.
In BES 4.0 That is correct, because BES looks at delete items when removing items from handheld. But since you are archiving, these items are not found in the deleted items it doesnt know what to do with them and leaves them there.